Moody's may downgrade Huntington

Moody's Investors Service said it placed the ratings of Huntington Bancshares Inc. and its subsidiaries on review for downgrade following the company's announcement that it will take a $300 million charge for its exposure to Franklin Credit Management Corp.

Among the affected ratings are Huntington's A3 senior unsecured medium-term note program and Baa1 subordinated regular bonds; the A2 issuer ratings, A3 subordinated regular bonds and A2 senior unsecured regular bonds of Huntington National Bank and Sky Bank; the Baa1 preferred stock of Huntington Bancshares Capital Trust I, Huntington Capital II, Huntington Capital III, Huntington Preferred Capital, Inc. and Sky Financial Capital Trust I; and the Baa1 subordinated regular bonds of Sky Financial Group, Inc.

The agency said the review reflects the substantial size of the remaining net exposure to Franklin - more than $1 billion - and the possibility of additional write-downs. Additionally, the write-down will result in a sizable net loss in the fourth quarter and, combined with a large quarterly dividend, will result in a material deterioration in Huntington's capital ratios.

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